In their latest "Fund Alert," Stradley Ronon's Joan Ohlbaum Swirsky and Jamie Gershkow write, "What You Need to Know About Money Market Reform - Ratings." They write, "The fifth time was a charm for the U.S. Securities and Exchange Commission (SEC), as on September 16, 2015, the SEC adopted amendments to remove the requirement that a money market fund limit its investments to those rated within the top two categories by rating agencies (or to unrated securities of comparable quality). The SEC initially had discussed the removal of ratings from the money market fund rule in a 2003 concept release and had proposed the changes in 2008, 2009, 20112 and, most recently, July 2014. In place of the ratings requirement, a fund's board of directors or its delegate (such as the investment adviser) must determine whether each security presents minimal credit risk. The minimal credit risk test has been imposed since 1983, when Rule 2a-7, the money market fund rule, was adopted, but the Credit Rating Amendments flesh out that requirement by specifying factors that must be included in the minimal credit risk analysis, to the extent appropriate." Swirsky and Gershkow continue, "Rule 2a-7, as amended by the Credit Rating Amendments, also eliminates the current distinction between first-tier and second-tier securities, which results in elimination of the current limits on securities rated in the second-tier short-term rating category." In other news, The Wall Street Journal published, "Money-Fund Flows Are a Risk Meter." It says, "When investors start piling into money-market funds, it is a remarkably accurate indicator that credit markets are getting dicey, according to new research conducted by a pair of finance professors. The study says the money-fund indicator can be just as accurate as more-wonky indicators of market risk, such as credit-default-swap spreads, which show the cost of insuring corporate debt against default. "Our results suggest that mutual-fund flows give an indication on investor risk tolerance and can serve as risk indicators or serve as a proxy for market credit risk," Hsin-Hui Chiu and Lu Zhu, professors at California State University Northridge and the University of Wisconsin-Eau Claire, respectively, say in a September paper, "Can Mutual Fund Flows Serve as Risk Indicators? An Empirical Analysis with CDS Spreads." It continues, "So what has the money-fund indicator been telling us lately? Basically, it is saying "watch out" because since mid-September investors have been shoveling billions of dollars into money funds."

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